China July Caixin Manufacturing PMI comes in at 49.2, slipping into contraction for the first time in 3 months

  • expected 50.3 prior 50.5

Comments from the report, in brief:

  • Both manufacturing supply and demand contracted.
  • new export orders fell sharply in July, the lowest since September
  • manufacturing job market continued to deteriorate, though the contraction was marginally smaller than in the second quarter
  • gauges for prices remained weak, with the reading for input costs and output prices coming in below 50 for the fourth and fifth consecutive months, respectively. Deflationary pressure continued to build.
  • The July Politburo meeting highlighted that the current economy faces new difficulties and challenges, and that the external environment is complex and severe. The meeting emphasized the need to actively expand domestic demand and let consumption play a fundamental role in driving economic growth. In terms of policies, guaranteeing employment, stabilizing expectations and increasing household income should still be the top priorities. At present, monetary policy only has limited effect on boosting supply. An expansionary fiscal policy that targets demand should be prioritized.



China has two primary Purchasing Managers' Index (PMI) surveys - the official PMI released by the National Bureau of Statistics (NBS) and the Caixin China PMI published by the media company Caixin and research firm Markit / S&P Global.

While the NBS' PMIs cover large and state-owned companies, the Caixin PMI survey covers more small and medium-sized enterprises. As a result, the Caixin PMI is considered to be a more reliable indicator of the performance of China's private sector. Another difference between the two surveys is their methodology. The Caixin PMI survey uses a broader sample of companies than the official survey. Despite these differences, the two surveys often provide similar readings on China's manufacturing sector.